Ready for crowdfunding & the JOBS Act? A few words of caution.

The JOBS act legislation goes into effect today, beginning the crowdfunding era in fundraising for startups. Beginning today, startups can publicly solicit funding from accredited investors. There’s plenty of coverage of what this means, but I’d like to share a few words of caution with the rules that are still being drawn up by the SEC.

Its important you are informed because decisions you make on how you chose to raise funding will impact your company in new ways. A few highlights of the proposed rules that are important to understand:

• Demo days and pitch events are considered general solicitation

• If you generally solicit, you will have to ensure your investors are accredited — this may have the adverse impact of dampening the interest of angel investors

• You need to notify the SEC 15 days before you do any general solicitation, failure to do so will result in your company being put into the “penalty box” — a 1 year ban on fundraising

If you are fund raising, please read these pieces to inform yourself:

• Naval Ravikant — why you need to pay attention to general solicitation.

• Angel Capital Association — New SEC Rules could kill angel investing

In New Orleans we are fortunate to have the Vice Chairman of the Angel Capital Association working as an EIR with Idea Village this year. I’ve been fortunate to meet with Mike and hear directly from him the concerns he shares about the forthcoming changes with the JOBS Act. Today is the last day for public comment on the rules by the SEC, and you can learn more about the comments and submit yours here from AngelList.